3
April 2024
Hilton Food Group
plc Preliminary results
for the 52 weeks ended 31
December 2023
Robust financial and strong
operational performance in 2023
Current trading in line with
expectations
Business highlights - operational progress across all aspects
of the business
· Seafood recovery delivered ahead of plan, returning to full
year operating profitability and supporting uplift in Group
PBT
· Core Meat category continued to perform well; strong meat
volume growth in APAC and a resilient outturn in Europe and UK,
achieved against inflationary backdrop
· Growth of international customer base via new deal with
Walmart in Canada; organic growth achieved with existing customers,
such as successful launch of Swedish food park
· Action taken in vegan and vegetarian to successfully
consolidate business to single operating facility
· Industry-leading technology continued to provide competitive
edge, underpinning customer partnerships and supporting core
business; further headroom for growth
· Progress in Sustainable Protein Plan, a central foundation to
our commercial offer; more ambitious validated SBTi targets in line
with 1.5°C pathway
· Innovation across outstanding food products, supporting
customers in response to changing consumer trends. Great value
protein ranges and healthy new pre-prepared products
launched
Financial overview - growth in revenue and volume; increase
in profitability driven by Seafood
· Revenues up 3.7% to £3.99bn with volume increase of 0.7%;
adjusted operating profit increased by 33.5% to £95.0m with
statutory operating profit up 59.4%
· Strong free cash inflow of £112.1m (2022: outflow £79.4m);
remaining a highly cash generative core business
· Net bank debt £139.7m (2022: £211.6m); year end net bank debt
as a percentage of adjusted EBITDA reduced to 1.0 times (2022: 1.8
times)
· Proposed final dividend of 23.0p, taking total dividend for
2023 to 32.0p (2022: 29.7p) reflecting the Board's
confidence
|
|
2023
|
2022
|
Change
|
|
|
52 weeks
to
31 December 2023
|
52 weeks
to
1 January 2023
|
Reported
|
Constant
currency
|
|
|
|
|
|
|
|
Volume (tonnes) 1
|
517,347
|
513,816
|
0.7%
|
0.7%
|
|
Revenue
|
£3,989.5m
|
£3,847.6m
|
3.7%
|
5.7%
|
|
Adjusted operating profit
|
£95.0m
|
£71.1m
|
33.5%
|
34.7%
|
|
Adjusted profit before tax
|
£66.0m
|
£55.5m
|
19.0%
|
20.3%
|
|
Adjusted basic earnings per share
|
52.8p
|
45.1p
|
17.1%
|
17.9%
|
|
|
|
|
|
|
|
Statutory operating profit
|
£86.1m
|
£54.0m
|
59.4%
|
|
|
Statutory profit before tax
|
£48.6m
|
£29.6m
|
64.2%
|
|
|
Statutory basic earnings per share
|
40.6p
|
19.8p
|
105.1%
|
|
|
Free cash flow
|
£112.1m
|
£-79.4m
|
|
|
|
Net bank debt 3
|
£139.7m
|
£211.6m
|
|
|
|
Dividends paid and proposed in respect of the
year
|
32.0p
|
29.7p
|
7.7%
|
|
|
|
|
|
|
|
Notes
1
Volume includes 50% share of the Portuguese joint
venture activities
2
Adjusted results represent the IFRS results
before deduction of acquisition intangibles amortisation,
depreciation of fair value adjustments to property, plant &
equipment, exceptional items and also IFRS 16 lease adjustments as
detailed in the Alternative performance measures note 17. Unless
otherwise stated financial metrics in the Chairman's statement,
Chief Executive's summary and Performance and financial review
refer to the Adjusted results
3
Net bank debt represents borrowings less cash and
cash equivalents excluding lease liabilities
Outlook and current trading
2024 trading has started in line
with Board expectations although markets remain challenging. We are
confident the business is well placed, within a large and
attractive international market, to continue to deliver its
strategy to create long term value for shareholders, through its
outstanding protein products, dedicated partnerships, leading
technology offer through Greenchain Solutions and a robust
sustainability plan.
Growth prospects are underpinned
by the strength of our core meat business, the continued recovery
in seafood and in the medium term our recent acquisitions and the
developing relationship with Walmart in Canada. The Group's
financial position remains strong, with improving leverage and
headroom at comfortable levels, and we continue to explore new
growth opportunities with existing partners, wider geographic
expansion and complementary M&A.
Steve Murrells CBE Hilton Foods Chief Executive
Officer, said:
"Over the past year we've remained
focused on executing our strategy which has resulted in a good
performance against a challenging market. I am particularly pleased
with the results in our seafood category, returning to full year
operating profitability following a successful turnaround. Our core
meat category performed strongly and we worked closely with
customers to offer the highest quality and most relevant food
products to consumers.
"As I set out at our investor day
in November, Hilton Foods has the right attributes in place to
unlock growth organically and with new customers thanks to our
multi-category product offer, industry leading technology and
rigorous sustainability credentials. I'd like to thank all our
teams across our markets for their continued hard work and
contribution over the year; we are well-placed as we look to the
future."
A presentation for analysts and
investors will be held this morning at 09.00am, which will also be
webcast. For access to the live webcast, please register at the
following link:
https://stream.brrmedia.co.uk/broadcast/65d774a3994661e3abf8ada5
Enquiries
Hilton Foods
Tel: +44 (0) 1480 387214
Steve Murrells CBE, Chief Executive
Officer
Matt Osborne, Chief Financial
Officer
Headland Consultancy Limited
Tel: +44 (0) 20 3805 4822
Susanna
Voyle
Email: hiltonfood@headlandconsultancy.com
Will Smith
Joanna Clark
This announcement contains inside
information.
About Hilton Foods
Hilton Foods is a leading
international multi-protein producer, serving customers and retail
partners across the world with high quality meat, seafood, vegan
and vegetarian foods and meals. We are a business of over 7,000
employees, operating from 24 technologically advanced food
processing, packing and logistics facilities across 19 markets
in Europe, Asia Pacific and North America. For thirty years,
our business has been built on dedicated partnerships with our
customers and suppliers, many forged over several decades, and
together we target long-term, sustainable growth and shared value.
We supply our customers with high quality, traceable, and assured
food products, with high standards of technical excellence and
expertise.
Chairman's introduction
Strategic progress
Hilton Foods has continued to make
good strategic progress in a year of continuing global and economic
challenges. We have become a multi-category and multichannel
business, constantly and rapidly building our expertise, breadth
and scale in all four food categories and in our supply chain
services offer and we remain on the journey to our ambition to be
the international food and supply chain services partner of
choice.
We have deep retailer partnerships
with leading automation and processes including physical automated
conveyor air bridges installed in facilities in Australia and New
Zealand that link our processing facilities directly to our
customers' distribution centres to optimise the supply chain
process bringing significant logistics efficiency savings with
lower carbon emissions.
During the year we signed a long
term supply agreement with Walmart, a new customer, and will build
a green field facility in Eastern Canada to supply a range of
protein products to include beef, lamb, pork, seafood as well as
some added-value products. This new Hilton Foods facility will
provide robotised store order picking into Walmart's distribution
centres.
We have also worked to develop our
Greenchain Solutions business which offers an integrated tech stack
proposition combining our existing end-to-end supply chain,
manufacturing control and automation software expertise together
with a specialist flexible factory wide ERP system.
We continue to explore
opportunities to develop our cross-category business in both
domestic and overseas markets as well as applying our
state-of-the-art skills and experience to deliver value to our
customers.
Group performance
2023 saw a recovery in
profitability with sales and volumes increasing which continues a
trend of continuous volume growth achieved in every year since
Hilton's flotation in 2007. Our UK Seafood business recovered
strongly during the year although market challenges in our
vegetarian/vegan business remain. We have taken steps to
consolidate this business into a single operating facility and we
are confident in the opportunities that the category will present
for Hilton Foods over the coming years.
Hilton Foods generated strong
operating cash flows during 2023 enabling further significant
investment in our facilities to increase capacity, improve
operational efficiency and offer innovative solutions to our
retailer partners. Hilton Foods has a robust balance sheet and
operating well within our banking covenants. This enables us to
continue to invest to support the growth of the
business.
Dividend policy
The Group has maintained a
progressive dividend policy since flotation and remain confident
that this continues to be appropriate. With the proposed final
dividend of 23.0p per ordinary
share, total dividends in respect of 2023
will be 32.0p per ordinary share, an increase of 7.7% compared to
last year.
Our Board, purpose and governance
The Hilton Board is responsible
for the long-term success of the Group and establishing its
purpose, values and strategy aligned with its desired culture. Our
purpose is to partner with leading retail and foodservice customers
to produce high quality food products at scale that consumers
desire. Our principle of partnership extends to our suppliers,
colleagues and the communities in which we operate. We enable
success through our passion for innovation, improving supply
chains, processes and packaging, and continually developing our
product ranges to best meet consumer needs. By creating efficiency
and flexibility in the food supply chain as an international food
processor and a supply chain service specialist we deliver growth
for our stakeholders.
To achieve this the Board has an
appropriate mix of skills, depth and diversity and a range of
practical business experience, which is available to support and
guide our management teams across a wide range of countries,
continuing to address succession planning and maintain a talent
pipeline. We remain committed to achieving good governance balanced
against our desire to preserve an agile and entrepreneurial
approach. I would like to thank my colleagues on the Board for
their support, counsel and expertise during the year. During the
year Steve Murrells joined the Board as CEO replacing Philip Heffer
who has remained in the business as co-founder and Board advisor in
a part time capacity. Sarah Perry joined the Board as an
independent Non-Executive Director replacing Christine
Cross.
The Board takes its
responsibilities to promote the success of the Company for the
benefit of its stakeholders as a whole very seriously. We take the
interests of our workforce and other stakeholders fully into
account in Board discussions and decision making. Details of the
Group's policies and procedures that have been implemented to
enhance stakeholder and workforce engagement, which explain how
these interests have influenced our decisions, are set out in the
governance section of our Annual report.
Sustainability
|
Our 2025 Sustainable Protein Plan
remains at the heart of Hilton Foods and we are encouraged by the
progress being reported across the Group. When we developed the
Plan in 2021, we agreed a series of challenging targets, many of
them industry leading, such as our Science-Based Targets, to halve
food waste by 2030 and having 30% of women in leadership positions.
It is a reflection of the Hilton Foods culture and the commitment
of management that many of these targets have now been met.
Additionally our updated, more challenging, Science-Based Targets
were approved in March 2024.
The starting point for the Plan
was our point of difference as a company. Hilton Foods operates in
a privileged position, serving customers across multiple markets
and working in partnership with experts and leaders across the food
industry from farm to fork and beyond. This gives us the
opportunity to help drive targeted, practical changes and help
tackle some of the biggest problems facing the world.
|
Annual General Meeting
This year's AGM will be held at
Hilton's offices at 2-8 The Interchange, Latham Road, Huntingdon,
Cambridgeshire PE29 6YE in a hybrid format on Monday 20 May 2024 at
noon. Please refer to our website at www.hiltonfoods.com/investors/agm/
for further guidance.
Robert Watson OBE
Chairman
2 April 2024
Chief Executive's summary
Strong performance in line with
expectations
We have delivered a strong
performance in a challenging environment through focus on our core
business and getting back to basics. Revenue has grown 5.7% on a
constant currency basis (up 3.7% at actual fx rates) whilst volume
has remained robust up 0.7% and adjusted profit before tax has
recovered strongly, up 19.0% from delivery of the turnaround plan
in our seafood business.
Segment performance
UK and Ireland
Adjusted operating profit of £35.5m (2022: £13.6m) on revenue
of £1,329.3m (2022: £1,282.1m)
This operating segment covers the
Hilton Foods businesses and joint ventures in the UK and Ireland
including meat processing facilities in the UK in Huntingdon,
seafood facilities in Grimsby, our food service business Fairfax
Meadow and our ROI meat facility in Drogheda.
Volumes were 3.0% lower with
revenue increasing by 3.5% on a constant currency basis (up 3.7% at
actual fx rates) due to raw material price inflation. Operating
margins increased to 2.7% (2022: 1.1%) reflecting a strong
performance from the core meat businesses as well as improved
profitability of UK Seafood.
The turnaround of our UK Seafood
business recovery has been delivered ahead of plan, returning to
full year operating profit and supporting the increase in adjusted
operating profit. I am very proud of the performance that the team
have delivered within our UK Seafood business over the last year,
which has been delivered through consolidating and driving the core
offer, effective inflation recovery and profitable new business
wins supported by a sustainable cost out plan. The foundations are
strong and momentum now builds into 2024 and beyond.
Fairfax Meadow continues to grow
revenues and win new business. They are strategically well-placed,
with a multi-category offer to capitalise on further
opportunities.
Europe
Adjusted operating profit of £40.9m (2022: £36.0m) on revenue
of £1,045.3m (2022: £972.6m)
This operating segment covers the
Group's meat, easier meals, seafood, vegan and vegetarian
businesses and joint ventures in Holland, Sweden, Denmark, Central
Europe, Greece and Portugal.
Volumes were 2.0% lower with
revenue increasing by 6.8% on a constant currency basis (up 7.5% at
actual fx rates) reflecting a full year of Foppen following its
acquisition in 2022 and raw material price inflation. Operating
margins were 3.9% (2022: 3.7%). We have delivered strong growth in
the easier meals category as shoppers sought quicker and easier
meal solutions in Central Europe and Scandinavia. We launched our
fresh, convenience food park in Sweden in the second half of the
year serving our local partner there as well as in Denmark where we
provide highly localised pre-prepared products, which are in great
demand.
The business has taken decisive
and timely action consolidating Dalco, our vegan and vegetarian
business, into a single operating facility right sizing it in
response to the structural market reset that has taken place in
this sector.
APAC
Adjusted operating profit of £30.3m (2022: £26.7m) on revenue
of £1,615.0m (2022: £1,592.9m)
In Australia, the Group operates
three plants in Bunbury in Western Australia, Melbourne and
Brisbane. We also have a multi protein food park facility in
Auckland, New Zealand.
Volumes during the period
increased strongly by 7.2%. Revenues were 6.7% higher on a constant
currency basis (up 1.4% at actual fx rates). Operating margins
increased to 1.9% (2022: 1.7%) largely attributable to the recovery
of higher interest costs under our cost plus contract. We continue
to see strong performance in the APAC region delivered through our
partnership with Woolworths. Across all our regions including APAC,
we have supported our customers to ensure they have relevant
product ranges at affordable prices to meet the changing needs of
consumers at a time of economic uncertainty.
Outstanding food products
Hilton Foods is a business built
on a passion for food. The food skills within our innovation teams
have supported our customers to have the right product ranges on
the shelf to successfully meet the needs of their consumers.
Combined with our insight experts we have driven growth across
categories and regions.
In Hilton Foods Australia, we have
grown sales through developing great value products in beef, pork,
lamb and poultry including bigger, better value packs. In the UK we
have launched premium, award winning, Christmas centre piece
products and a new range of convenient ready to cook meals and
within Europe we have relaunched our new and improved sandwiches
and wraps, and new, healthier, ready meals.
Throughout 2023 we have continued
to trial and roll out flow wrap packaging for mince products in
Holland, Sweden, Central Europe, UK and Ireland. Through working in
collaboration with our strategic supplier partners 70% of our
packaging is now recyclable, and we have reduced overall packaging
weight by 1,200t*.
* versus base of 2020
Growing across international markets
Hilton Foods is uniquely placed to
grow its product catalogue by region and this is a key focus for
the business as we seek to grow in our existing markets. We have
started with launching the fresh food park in partnership with ICA
in Sweden and began working with a new retail partner in Ireland.
Work is now underway, exploring the opportunity to increase our
presence in seafood products across the APAC region.
In September 2023 we announced
that we have signed a new long-term partnership with Walmart in
Canada and will be serving their needs across meat and seafood
products alongside sortation services from our first facility in
North America.
Our primary focus remains on
organic growth given the significant opportunities we have. However
we will continue to selectively explore any complementary M&A,
with strong returns and synergies, that arise.
Industry leading technology and facilities
Our industry-leading technology is
a key element of our competitive edge, facing into macro market
trends including labour availability and cost, and supply chain
traceability and transparency. We provide highly efficient supply
chains to our partners through scalable robotics and cloud-based
infrastructure, allowing retailers to manage their full end-to-end
value chain, from specification to product quality and cost of
production mapping.
The Foods Connected platform
supports both our business and our customers' businesses and their
supply chains, optimising data-led decisions, driving cost
efficiency and enabling visibility of supply chain
risks.
Our integrated technology offer
supports our core food business and we have further improved our
highly automated food processing facilities, through our joint
venture with Agito. This year we have made investments in end of
line robotic automation in our UK meat and seafood facilities
improving efficiency and reduced reliance on labour.
As well as supporting our core
food business, each of our technology businesses are unlocking
opportunities to commercialise their products and services outside
of Hilton Foods. In the year both Foods Connected and Agito have
won new customers in new geographies, and looking forward to 2024,
our food focused ERP system Evolve 4 will start to be rolled out to
Hilton Foods facilities.
The Sustainable Protein Plan
The Sustainable Protein Plan
underpins everything we do and our sustainability commitments are
crucial to our teams, our customers and their customers. Our
principle of operating through partnership extends into
sustainability where we deliver positive change by collaborating
throughout the supply chain. This year we have continued to make
progress on our commitments, with a reduction of 13%* in scope 1
and 2 emissions, achieving ISO 50001 accreditation for our energy
management system across 10 of our facilities, and reducing our
food waste by 42%*. We have maintained our CDP rating of A- with
improvements in both categories of soy and timber. We continue to
raise our standards with more ambitious science based targets, in
line with a 1.5̊ C pathway, which were validated in March
2024.
* versus base of 2020
Looking forwards
Through our principle of being
consumer led we are well placed to grow. The strength and the
longevity of our partnerships underpins everything that we do. We
can expand both with existing partners and into new territories.
Our strong financial position allows us to continue to invest in
the future. In November, we shared our medium-term financial
ambitions and strategic capital allocation framework to support our
investment for long-term success. I believe that Hilton Foods has
all the right ingredients to deliver long-term success.
Steve Murrells CBE
Chief Executive Officer
2 April 2024
Performance and financial review
Summary of Group performance
This performance and financial
review covers the Group's financial performance and position in
2023. Hilton Foods overall financial performance saw strong profit
growth reflecting the recovery in our UK Seafood business combined
with volumes and sales growth. Cash flow generation was strong,
supporting our ongoing significant investment in
facilities.
Basis of preparation
The Group is presenting its
results for the 52 week period ended 31 December 2023, with
comparative information for the 52 week period ended 1 January
2023. The financial statements of the Group are prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and UK adopted
International Accounting Standards.
Hilton uses Alternative
Performance Measures (APMs) to monitor the underlying performance
of the Group. Management use these APMs to monitor and manage the
business's performance day-to-day and therefore believe they
provide useful additional information to shareholders and wider
users of the financial statements.
2023 Financial performance
Volume and revenue
Volumes grew by 0.7% in the year
reflecting growth in APAC and full year volumes at Foppen acquired
in 2022. Additional details of volume growth by business segment
are set out in the Chief Executive's summary. Revenue increased
3.7% (5.7% on a constant currency basis) reflecting higher raw
material prices and volume growth.
Operating profit and margin
Adjusted operating profit of
£95.0m (2022: £71.1m) was 33.5% higher than last year and 34.7%
higher on a constant currency basis reflecting the recovery in our
Seafood business. IFRS operating profit was £86.1m (2022: £54.0m)
after charging £3.9m in exceptional costs (2022: £11.9m). The
operating profit margin in 2023 increased to 2.4% (2022: 1.8%) and
the operating profit per kilogram of packed food sold increased to
18.4p (2022: 13.8p) mainly reflecting the recovery in our Seafood
business.
Net finance costs
Adjusted net finance costs,
excluding exceptional items and lease interest, increased to £28.9m
(2022: £15.7m) reflecting the impact of higher market interest
rates and supply chain financing costs. Interest cover as a
proportion of adjusted operating profit in 2023 reduced to 2.3
times (2022: 4.5 times). IFRS net finance costs were £37.5m (2022:
£24.4m).
Taxation
The adjusted taxation charge for
the period was £17.2m (2022: £13.5m). The effective tax rate was
26.0% (2022: 24.3%). The IFRS taxation charge was £10.6m (2022:
£10.1m) with an effective tax rate of 21.9% (2022:
34.2%).
Net income
Adjusted net income, representing
profit for the year attributable to owners of the parent, of £47.2m
(2022: £40.2m) was 17.4% higher than last year and 18.3% higher on
a constant currency basis. IFRS net income was £36.4m (2022:
£17.7m).
Earnings per share
Adjusted basic earnings per share
52.8p (2022: 45.1p) was 17.1% higher than last year and 17.9% on a
constant currency basis. IFRS basic earnings per share were 40.6p
(2022: 19.8p). Diluted earnings per share were 40.2p (2022:
19.7p).
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
Adjusted EBITDA, which is used by
the Group as an indicator of cash generation, increased to £144.0m
(2022: £119.9m). IFRS EBITDA was £165.6m (2022:
£131.8m).
Return on capital employed (ROCE)
ROCE, calculated as adjusted
operating profit divided by average of opening and closing capital
employed representing total equity adjusted for net bank cash/debt,
leases, derivatives and deferred tax, was 18.3% (2022:
14.8%).
Free cash flow and net debt position
Operating cash flow was strong in
2023 with cash flows from operating activities of £216.1m (2022:
£98.3m) reflecting higher profits and favourable working capital
movements. IFRS free cash inflow, after capital expenditure of
£58.6m but before dividends and financing, was £112.1m (2022:
outflow £79.4m).
The Group closing net bank debt
comprising borrowings less cash and cash equivalents excluding
lease liabilities, reduced to £139.7m (2022: £211.6m) reflecting
bank borrowings of £266.4m net of cash balances of £126.7m. Net
debt including lease liabilities was £366.6m (2022: £457.7m). Year
end net bank debt as a ratio of adjusted EBITDA reduced to 1.0
times (2022: 1.8 times).
At the end of 2023 the Group had
undrawn committed bank facilities under its syndicated banking
facilities of £108.7m (2022: £106.4m). These banking facilities are
subject to covenants comprising net bank debt to EBITDA and EBITDA
interest cover. There was comfortable headroom under these
covenants at the end of the year for these metrics.
The resilience of the Group has
been assessed by applying significant downside sensitivities to the
Group's cash flow projections. Allowing for these sensitivities and
potential mitigating actions, the Board is satisfied that the Group
has adequate headroom under its existing committed facilities and
will be able to continue to operate well within its banking
covenants.
Dividends
The Group has maintained a
progressive dividend policy since flotation and has recommended a
final dividend of 23.0p per ordinary share in respect of 2023.
This, together with the interim dividend of 9.0p per ordinary share
paid in December 2023, represents an increase of 7.7% compared to
last year at 29.7p per ordinary share. The final dividend, if
approved by shareholders, will be paid on 28 June 2024 to
shareholders on the register on 31 May 2024 and the shares will be
ex dividend on 30 May 2024.
Key performance indicators
How we measure our performance against our strategic
objectives
The Board monitors a range of
financial and non-financial key performance indicators (KPIs) to
measure the Group's performance over time in building shareholder
value and achieving the Group's strategic priorities. The nine
headline KPI metrics used by the Board for this purpose, together
with our performance over the past two years, is set out
below:
|
|
2023
52 weeks
|
2022
52 weeks
|
Definition, method of calculation and
analysis
|
|
Financial KPIs
|
|
|
|
|
Revenue growth (%)
|
3.7%
|
16.5%
|
Year on year revenue growth
expressed as a percentage. The 2023 increase reflects volume growth
and higher raw material prices.
|
|
Adjusted operating profit margin
(%)
|
2.4%
|
1.8%
|
Adjusted operating profit
expressed as a percentage of turnover. The improvement in 2023
mainly reflects the recovery in our Seafood business.
|
|
Adjusted operating profit margin
(pence per kg)
|
18.4
|
13.8
|
Adjusted operating profit per
kilogram processed and sold in pence. The increase in 2023 mainly
reflects the recovery in our Seafood business.
|
|
Adjusted earnings before interest,
taxation, depreciation and amortisation (EBITDA) (£m)
|
144.0
|
119.9
|
Adjusted operating profit before
depreciation and amortisation. The increase in 2023 mainly reflects
the recovery in our Seafood business.
|
|
Return on capital employed (ROCE)
(%)
|
18.3%
|
14.8%
|
Adjusted operating profit divided
by average of opening and closing capital employed representing
total equity adjusted for net bank cash/debt, leases, derivatives
and deferred tax. The increase in 2023 is primarily driven by
higher profitability.
|
|
Free cash flow (£m)
|
112.1
|
(79.4)
|
IFRS cash inflow/(outflow) before
minorities, dividends and financing. The increase in 2023 is
primarily attributable to i) improved operating cash flows driven
by higher profits and favourable working capital movements and ii)
the absence of acquisitions.
|
|
Net debt / EBITDA ratio
(times)
|
1.0
|
1.8
|
Year end net bank debt as a
percentage of adjusted EBITDA. The improvement in 2023 is due to
strong profit and cash generation.
|
|
Non-financial KPIs
|
|
|
|
|
Growth in sales volumes
(%)
|
0.7%
|
4.3%
|
Year on year volume growth. Lower
volume growth in 2023 reflected growth in APAC and full year
volumes at Foppen acquired in 2022.
|
|
Customer service level
(%)
|
94.1%
|
95.9%
|
Packs of product delivered as a %
of the orders placed. The customer service level remains best in
class.
|
In addition, a much wider range of
financial and operating KPIs are continuously tracked at business
unit level.
Going concern statement
The Directors have performed a
detailed assessment, including a review of the Group's budget for
the 2024 financial year and its longer term plans, including
consideration of the principal risks faced by the Group. The
resilience of the Group has been assessed by applying significant
downside sensitivities to the Group's cash flow projections.
Allowing for these sensitivities and potential mitigating actions
the Board is satisfied that the Group is able to continue to
operate well within its banking covenants and has adequate headroom
under its committed facilities which do not expire until 2027. The
Directors are satisfied that the Company and the Group have
adequate resources to continue to operate and meet its liabilities
as they fall due for the foreseeable future, a period considered to
be at least 12 months from the date of signing these financial
statements. For this reason, they continue to adopt the going
concern basis for preparing the financial statements.
The Group's bank borrowings as
detailed in the financial statements and the principal banking
facilities, which support the Group's existing and contracted new
business, are committed. The Group is in full compliance with all
its banking covenants and based on forecasts and sensitised
projections is expected to remain in compliance. Future
geographical expansion which is not yet contracted, and which is
not built into our internal budgets and forecasts, may require
additional or extended banking facilities and such future
geographical expansion will depend on our ability to negotiate
appropriate additional or extended facilities, as and when they are
required. The Group renewed its banking facilities in 2022 with a
£424m five year revolving credit and term loan facility.
The Group's internal budgets and
forward forecasts, which incorporate all reasonably foreseeable
changes in trading performance, are regularly reviewed by the Board
and show that it will be able to operate within its current banking
facilities, taking into account available cash balances, for the
foreseeable future.
Viability statement
In accordance with provision 31 of
the 2018 UK Corporate Governance Code, the Directors confirm that
they have a reasonable expectation that the Group will continue to
operate and meet its liabilities, as they fall due, for the three
years ending in December 2026. A period of three years has been
chosen for the purpose of this viability statement as it is aligned
with the Group's three year plan, which is based on the Group's
current customers and does not incorporate the benefits from any
potential new contract gains over this period.
The Directors' assessment has been
made with reference to the Group's current position and strategy
taking into account the Group's principal risks, including those in
relation to the changing geopolitical and macroeconomic
environment, and how these are managed. The strategy and associated
principal risks, which the Directors review at least annually, are
incorporated in the three year plan and such related scenario
testing as is required. The three year plan makes reasoned
assumptions in relation to volume growth based on the position of
our customers and expected changes in the macroeconomic environment
and retail market conditions, expected changes in food raw
material, packaging and other costs, together with the anticipated
level of capital investment required to maintain our facilities at
state-of-the-art levels.
Cautionary statement
This Strategic report contains
forward-looking statements. Such statements are based on current
expectations and assumptions and are subject to risk factors and
uncertainties which we believe are reasonable. Accordingly the
Group's actual future results may differ materially from the
results expressed or implied in these forward-looking statements.
We do not undertake to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Matt Osborne
Chief Financial Officer
2 April 2024
Risk management and principal risks
Overview
Effective risk management at
Hilton Foods is essential to the delivery of our strategic
objectives and aims to safeguard the interests of all our
stakeholders in an increasingly complex world. Our proactive
approach to risk management ensures the long term sustainable
growth of all aspects of our business and is integrated into
everything we do.
Risks and risk management
In accordance with provision 28 of
the 2018 UK Corporate Governance Code, the Directors confirm that
they have carried out a robust assessment of the emerging and
principal risks facing Hilton Foods that might impede the
achievement of its strategic and operational objectives or affect
performance and cash position. As a leading international food and
supply chain services provider in a fast-moving environment it is
critical that Hilton Foods identifies, assesses and prioritises its
risks. The result of this assessment is a statement of principal
risks together with a description of the main controls and
mitigations that reduce the effect of those risks were they to
crystallise. This, together with the adoption of appropriate
mitigating actions, enables us to monitor, minimise and control
both the probability and potential impact of these
risks.
How we manage risk
Hilton Foods takes a proactive
approach to risk management with well-developed structures and a
range of processes for identifying, assessing, prioritising and
mitigating its key risks, as the delivery of our strategy depends
on our ability to make sound risk informed decisions. The internal
audit function provides independent assurance that Hilton Foods
risk management, governance and internal control processes are
operating effectively. The Audit Committee are regularly updated on
the risk based assurance plan by the internal audit function who
maintain and review processes for risk identification and
assessment, measurement, control, monitoring and
reporting.
Risk management process and risk appetite
The Board believes that it is
vital to strike the right balance between an appropriate and
comprehensive control environment and encouraging the level of
entrepreneurial freedom of action required to seek out and develop
new business opportunities; but, however skilfully this balance
between risk and reward is struck, the business will always be
subject to a number of risks and uncertainties, as outlined
below.
At Hilton Foods we nurture a
culture where everyone is required to be aware of the risks facing
the business and their responsibilities for managing them. To
support this we maintain and create an environment where employees
feel comfortable speaking up. Our processes for identifying
existing and emerging risks and responding collaboratively to them
is managed by the Internal Audit function. Identified risks are
measured and assessed for likelihood and impact allowing for the
correct risk responses to be developed. Policies, procedures,
controls and other measures are put in place to mitigate risks. We
use a suite of preventative, detective and corrective
controls.
Risk ownership is assigned to key
leaders. This ownership is reviewed as part of the ongoing risk
management process. Mitigation plans and controls are agreed in
conjunction with the risk owner.
Not all the risks listed are
within the Group's control and others may be unknown or currently
considered immaterial but could turn out to be material in the
future. These risks, together with our risk mitigation strategies,
should be considered in the context of our risk management and
internal control framework, details of which are set out in the
Corporate governance statement. It must be recognised that systems
of internal control are designed to manage rather than completely
eliminate any identified risks.
Risk management during 2023
Increasing geopolitical uncertainty
Escalating tensions in the Middle
East, the ongoing conflict in Ukraine and the prospect of
disruption resulting from major political elections in 2024
increase the risk impacting our supply chains and operations.
Disruption to energy markets, global shipping and international
trade can have far-reaching impacts. Learnings from the Covid-19
pandemic have helped us to build resilience in our supply chains
and operations.
The macroeconomic environment
Although we expect energy price
volatility and the acute cost of living crisis to ease as the rate
of food price inflation slows, consumer spending and eating habits
have been impacted. We recognise the
effect of increasing interest costs on all businesses and we
continue to focus on ways of reducing our exposure such as the use
of cash pooling and exploring working capital financing.
Our continued focus on cost
control, innovation and factory efficiency is enabling us to manage
the inflationary pressures the industry is currently facing.
Through our strong customer relationships we are able to support
consumers to navigate through these challenging times.
Post-Brexit trade and regulatory landscape
We continue to monitor the UK and
EU regulatory and trade environments as they evolve and amend
processes and operations as required. We are working closely with
our customers and supply chains to ensure preparation for the
implementation of changes to the UK Border processes through 2024.
Our focus on technology and automation further reduces our risk
exposure in this area.
Principal risks
The most significant business
risks that Hilton Foods faces, together with the measures we have
adopted to mitigate these risks, are outlined in the table below.
This is not intended to constitute an exhaustive analysis of all
risks faced by Hilton Foods, but rather to highlight those which
are the most significant.
|
Description of risk
|
Its potential impact
|
Risk mitigation measures and strategies
adopted
|
|
Risk 1
The progress of Hilton Foods
business is affected by the macroeconomic and geopolitical
environment and levels of consumer spending.
 No
movement
|
No business is immune to difficult
economic climates. The macroeconomic and geopolitical landscape,
exacerbated by the Ukrainian war, geopolitical tension in the Red
Sea region and current interest rates, is placing extraordinary
financial pressures on our supply chains, operations, consumers and
customers.
The risk of energy price
volatility and the ongoing cost of living crisis is impacting
consumer spending and eating habits. As a result, our retail
customers are under immense pressure to deliver value and are
sharing that pressure with supplier partners.
|
Our strong growth model, based on
successful diversification across different proteins and expanding
as a technology-led supply chain partner is built on our strong ESG
credentials which underpin our business resilience.
We continue to broaden product
ranges with our strong retail partners, maintaining a single-minded
focus on minimising unit packing costs, whilst continuing to
deliver high levels of product quality and integrity.
Hilton Foods is able to harness
its innovative and agile approach with its class-leading technology
and systems to respond quickly and effectively to macroeconomic
challenges and opportunities.
We recognise the impact of
increasing interest costs on all businesses and we continue to
focus on ways of reducing our exposure such as the use of cash
pooling and exploring working capital financing.
|
|
Risk 2
Hilton Foods growth potential may
be affected by the success of our customers and the growth of their
packed food sales.
No
movement
|
Hilton Foods products
predominantly carry the brand labels of our customers so our sales
are dependent on the success of our customers and their consumer
perception which is increasingly influenced by environmental,
social and governance (ESG) considerations.
|
Hilton Foods plays a very
proactive role in enhancing its customers' brand values, by
providing high quality, competitively priced products, high service
levels, ongoing product and packaging innovation and category
management support. We recognise that quality and traceability
assurance are integral to our customers' brands and we work closely
with customers to ensure rigorous quality assurance standards are
met. Our customers continuously measure performance across a very
wide range of parameters, including delivery time, product
specification, product traceability and accuracy of documentation.
We work closely with our customers to identify continuing
improvement opportunities across the supply chain, including
enhanced product presentation, extended shelf life and reduced
wastage at every stage in the supply chain.
Our ESG strategy underpins the
growth of our product sectors for our customers and supports them
to reach their goals. Our ambitious 2025 Sustainable Protein Plan
is in partnership with our customers and suppliers as we engage in
the key collaborative initiatives that drive sustainability for our
sectors and raise the bar together.
We have set stretching goals that
drive impactful actions that become integrated into our core
business practices. Our data collection platform, Foods Connected,
demonstrates the assurance of standards across our supply
chains, and allows us to measure progress towards our 2025
targets.
|
|
Risk 3
Hilton Foods strategy focuses on a
small number of customers who can exercise significant buying power
and influence when it comes to contractual renewal terms at 1 to
15-year intervals.
No
movement
|
Although Hilton Foods has
historically relied on a few, influential retailers for a larger
part of our revenue, this has diversified in recent years. The
larger retail chains continue to focus on strengthening their
market share of protein products in the countries in which we
operate, creating an increasingly competitive retail environment.
This has increased the buying and negotiating power of our
customers, which could enable them to seek better terms over
time.
During periods of unprecedented
inflationary pressure, misalignment between production costs and
agreed operational packing rates may occur, potentially impacting
profitability.
|
Hilton Foods is progressively
widening its customer base, with the recent announcement of a
partnership with Walmart Canada bringing further diversification to
the customer portfolio. We maintain a high level of investment in
state-of-the-art facilities, which together with management's
continuous focus on reducing costs, allows us to operate very
efficiently at very high throughputs and price our products
competitively.
Hilton Foods operates an
entrepreneurial business structure, which enables us to work very
closely and flexibly with retail partners, in order to achieve high
service levels in terms of orders delivered, delivery times,
compliance with product specifications and accuracy of
documentation, all backed by an uncompromising focus on food
safety, product integrity and traceability assurance.
Hilton Foods has long-term supply
agreements in place with its major customers, with pricing either
on a cost plus or agreed packing rate basis.
The Group maintains an ongoing
focus on cost control, innovation and factory efficiency to manage
inflationary pressures. Hilton continues to evolve and respond to
changing market conditions.
The provision of added value
services in distribution and logistics deepens the relationships we
have with our retailer partners. Greenchain Solutions, our
technology and services business, offers an industry-leading
technology platform providing end-to-end supply chain and
integrated automation solutions. Investment in these services means
that we are able to develop and maintain a technology advantage
within our industry.
|
|
Risk 4
As Hilton Foods continues to grow
there is more reliance on key personnel and their ability to manage
growth, change, integration and compliance across new legislative
and regulatory environments. This risk increases as the Group
continues to expand with new customers and into new
territories either organically or through
acquisition with potentially greater reliance on
stretched skilled resource and execution of simultaneous growth
projects.
movement
|
The Group may struggle to meet key
strategic objectives and projects and fail to adhere to regulatory
and legislative requirements, which in turn detracts from our
performance delivery for our customers.
|
The Group carefully manages its
skilled resources including succession planning and maintaining a
talent pipeline. The Group is evolving its people capability
balanced with an appropriate management structure within the
overall organisation. Hilton Foods continues to invest in
on-the-job training and career development, whilst recruiting high
quality new employees, as required to facilitate the Group's
ongoing growth. Appointment of additional key resources and
alignment of structures have supported the enhancement of project
management control and oversight. Control systems embedded in
project management enable the risks of growth to be appropriately
highlighted and managed. To underscore our efforts, we have active
relationships with strong industry experts across all areas of
business growth.
In the current climate, strong
partnership and proximity to our customers are fundamental. Hilton
Foods leadership continues to develop its organisational structures
to ensure as close a relationship with our retail partners as
possible.
|
|
Risk 5
Hilton Foods business strength is
affected by our ability to maintain a wide and flexible global food
supply base operating at standards that can continuously achieve
the specifications set by ourselves and our customers. Increasing
geopolitical tension has heightened this risk exposure into
2024.
movement
|
Hilton Foods is reliant on its
suppliers to provide sufficient volume of products, to the agreed
specifications, in the very short lead times required by customers,
with efficient supply chain management being a key business
attribute. The Group has both local and global sourcing models.
Current or future tariffs, quotas or trade barriers imposed by
supplier countries and other global trade developments, could
materially affect the Group's international procurement ability and
therefore potentially impact our ability to meet agreed customer
service levels.
|
Hilton Foods maintains a flexible
global and local food supply base, which is progressively widening
as it expands and is continuously audited to ensure standards are
maintained, so as to have in place a wide range of options should
supply disruptions occur.
We have also developed
partnerships with key strategic suppliers who share our commitment
to quality, food safety, animal welfare and
sustainability.
We engage with our suppliers
through our supplier management platform, Foods Connected where we
track supply chain compliance, internal quality procedures and
manage the buying, planning and selling of our raw materials. This
provides further assurance through strengthening supply chain
robustness and transparency.
|
|
Risk 6
Contamination within the supply
chain including outbreaks of disease and feed contaminants
affecting livestock and fish.
No
movement
|
This will potentially affect
Hilton Foods ability to procure sufficient quantities of safe raw
material.
|
Hilton Foods sources its food from
a trusted raw material supply base, all components of which meet
stringent national, international and customer standards. We are
subject to demanding standards which are independently monitored in
every country and reliable product traceability and high welfare
standards from the farm to the consumer are integral to our
business model. Full traceability from source to packed product is
ensured across our suppliers, supported by a comprehensive ongoing
audit programme. Within our factories, Global Food Safety
Initiative (GFSI) benchmarked food safety standards and our own
factory standard assessments drive the enhancement of the processes
and controls that are necessary to ensure that the risks of
contaminants throughout the processing, packing and distribution
stages are mitigated and traceable should a risk ever
materialise.
|
|
Risk 7
Significant incidents such as
fire, flood, pandemic or interruption of supply of key utilities
could impact the Group's business continuity.
No
movement
|
Such incidents could result in
systems or manufacturing process stoppages with consequent
disruption and loss of efficiency which could impact the Group's
sales.
|
Hilton Foods has robust business
continuity plans in place including sister site support protocols
enabling other sites to step in with manufacturing and distribution
of key product lines where necessary. Continuity management systems
and plans are suitably maintained and adequately tested including
building risk assessments and emergency power solutions. There are
appropriate insurance arrangements in place to mitigate against any
associated financial loss.
|
|
Risk 8
Hilton Foods IT systems could be
subject to cyber-attacks, including ransomware and fraudulent
external email activity. Such attacks are rapidly increasing in
frequency and sophistication, especially with the progression of
artificial intelligence.
movement
|
Hilton Foods operations are
underpinned by a variety of IT systems. Loss or disruption to those
IT systems or extended times to recover data or functionality could
disrupt our operations and affect our sales and
reputation.
Unauthorised access to systems,
both within our own network and in our supply chains, could lead to
loss of sensitive information.
The risk of cyber attack is
exacerbated by increasing geopolitical uncertainties.
|
Our robust IT control framework,
including our Information Security Program is aligned with the
National Institute of Standards and Technology (NIST) Cybersecurity
and ISO Frameworks. We proactively identify and assess
vulnerabilities in our systems through simulated attacks, annual
penetration testing and weekly vulnerability scans. Remediation
procedures allow us to correct potential weaknesses promptly.
Testing is conducted by both internal staff and specialist external
bodies. We continuously improve our IT control framework which is
applied consistently throughout the business and ensures that our
defences remain resilient in the face of evolving cyber
threats.
Our Information Security Program
places a strong emphasis on Incident Reporting and Response. We are
establishing a process for employees to promptly report any
potential security incidents, fostering a culture of transparency
and accountability. In the event of an incident, our response
protocols enable us to swiftly and effectively contain, eradicate,
and recover from security breaches.
Cyber awareness training plays a
vital role in empowering our workforce to recognise and report
potential incidents. Frequent testing and simulations help bolster
the resilience of the organisation.
The Board and Risk Management
Committee are regularly updated on cyber security risk and
mitigations. IT risk is considered when assessing new ventures, new
sites are required to comply with our minimum standards and
operating models. IT forms part of site business continuity
exercises which test and help develop the capacity to respond to
possible crises or incidents. There are regular IT security reviews
to ensure compliance with expected levels of updates to
applications, servers and data centres.
|
|
Risk 9
A significant breach of health and
safety legislation or accident resulting from negligence or
management oversight. The complexity of this risk increases as the
Group expands both geographically and into new product
groups.
No
movement
|
Such a situation could lead to
reputational damage and regulatory penalties, including
restrictions on operations, fines or personal litigation claims, or
worst case a fatality.
|
Hilton Foods has established
robust health and safety processes and procedures across its
operations, including a Group oversight function which provides key
guidance and support necessary to strengthen monitoring, best
practice and compliance. The Group has also rolled out an enhanced
standardised safety framework. Health and safety performance is
reviewed regularly by the Board. We are in the process of rolling
out a health and safety auditing platform to support the
strengthening of our current health and safety
framework.
|
|
Risk 10
Hilton Foods business and supply
chain is affected by climate change risks comprising both physical
and transition risks. Physical risks include long-term rises in
temperature and sea levels as well as changes to the frequency and
severity of extreme weather events. Transition risks include policy
changes, reputational impacts, and shifts in market preferences and
technology.
No
movement
|
Potential physical impacts from
climate change could include a higher incidence of extreme weather
events such as flooding, drought, and forest fires that could
disrupt our supply chains and potentially impact production
capabilities, increase costs and add complexity. Action taken by
societies could reduce the severity of these impacts.
Governmental efforts to mitigate
climate change may lead to policy and regulatory changes as well as
shifts in consumer demand. The potential transitional impacts
include additional costs of low greenhouse gas emission farming
systems, and the potential of carbon price regulation aimed at
shifting consumers to lower carbon foods, which may reduce the
profitability of some of our products. Additionally there is
increased stakeholder focus on climate change issues. Our
reputation could be impacted if we are not active in reducing the
climate impacts of our operations and supply chains, resulting in
lower demand for our products.
|
We continue to develop our
approach to climate change risk mitigation. We have submitted more
ambitious Science Based Targets across Scope 1, 2 and 3 emissions
aligned to the 1.5 ̊C pathway, to decarbonise our own operations
and supply chains. We have set energy and water efficiency targets
for our sites and continue to engage in global collaborative action
for decarbonisation of our key raw materials. We
have targets in place to deliver net zero emissions from our
operations and supply chain before 2050.
Shifts in consumer demand are an
opportunity for growth in our portfolio of plant based and seafood
products. Additionally, we are ensuring we have the flexibility to
adapt our supply chains over time to mitigate physical
disruption.
We continue to review and develop
our assessment of the key physical and transition risks impacting
our business in line with the Task Force on Climate-related
Financial Disclosures (TCFD) recommendations.
|
Note: References in this
preliminary announcement to the Strategic report, the Corporate and
social responsibility report, the Directors' report and the
Corporate Governance statement are to reports which will be
available in the Company's full published accounts.
Responsibility statement of the Directors in respect of the
Annual report and financial statements
Each of the Directors whose names
and functions are set out below confirms that to the best of their
knowledge and belief:
·
the Group and Company financial statements, which
have been prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets,
liabilities and financial position of the Group and Company and
profit of the Group; and
·
the management reports, which comprise the
Strategic report and the Directors' report, include a fair review
of the development and performance of the business and the position
of the Group and the Company, together with a description of the
principal risks and uncertainties that it faces.
This responsibility statement was
approved by the Board of Directors on 2 April 2024 and is signed on
its behalf by:
Directors
R Watson OBE
Chairman
M
Osborne
Chief Financial Officer
Consolidated statement of comprehensive
income
|
|
|
2023
|
2022
|
|
|
|
52 weeks
|
52
weeks
|
|
|
Notes
|
£'000
|
£'000
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
Revenue
|
3
|
3,989,547
|
3,847,600
|
|
Cost of sales
|
|
(3,559,185)
|
(3,464,837)
|
|
Gross profit
|
|
430,362
|
382,763
|
|
Distribution costs
|
|
(47,655)
|
(42,028)
|
|
Other administrative
expenses
|
|
(293,288)
|
(276,048)
|
|
Exceptional income - Insurance
proceeds
|
4
|
9,776
|
-
|
|
Exceptional costs
|
4
|
(13,651)
|
(11,896)
|
|
Total administrative
expenses
|
|
(297,163)
|
(287,944)
|
|
Share of profit in joint
ventures
|
|
585
|
1,235
|
|
Operating profit
|
|
86,129
|
54,026
|
|
Finance income
|
5
|
571
|
356
|
|
Finance costs
|
5
|
(38,062)
|
(24,768)
|
|
Finance costs - net
|
|
(37,491)
|
(24,412)
|
|
Profit before income tax
|
|
48,638
|
29,614
|
|
Income tax expense
|
|
(11,863)
|
(10,267)
|
|
Exceptional tax income
|
4
|
1,221
|
145
|
|
Total income tax
expense
|
6
|
(10,642)
|
(10,122)
|
|
Profit for the period
|
|
37,996
|
19,492
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Owners of the parent
|
|
36,380
|
17,706
|
|
Non-controlling
interests
|
|
1,616
|
1,786
|
|
|
|
37,996
|
19,492
|
|
Earnings per share attributable to owners of the parent
during the year
|
|
|
|
|
Basic (pence)
|
7
|
40.6
|
19.8
|
|
Diluted (pence)
|
7
|
40.2
|
19.7
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
52 weeks
|
52
weeks
|
|
|
£'000
|
£'000
|
|
Profit for the period
|
37,996
|
19,492
|
|
Other comprehensive (expense)/income
|
|
|
|
Items that may be reclassified to
profit or loss
|
|
|
|
Currency translation
differences
|
(745)
|
29
|
|
Gain on cash flow
hedges
|
6,778
|
786
|
|
Other comprehensive income for the year net of
tax
|
6,033
|
815
|
|
Total comprehensive income for the year
|
44,029
|
20,307
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
Owners of the parent
|
42,423
|
18,219
|
|
Non-controlling
interests
|
1,606
|
2,088
|
|
|
44,029
|
20,307
|
|
|
|
|
|
The notes are an integral part of
these consolidated financial statements.
|
Consolidated and Company Balance sheets
|
|
|
|
Group
|
Company
|
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
Notes
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Assets
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
9
|
324,135
|
327,611
|
-
|
-
|
|
Intangible assets
|
10
|
156,122
|
160,480
|
-
|
-
|
|
Lease: right of use
assets
|
11
|
194,083
|
216,578
|
-
|
-
|
|
Investments
|
|
7,939
|
6,208
|
247,785
|
247,785
|
|
Deferred income tax
assets
|
|
19,136
|
13,801
|
-
|
-
|
|
|
|
701,415
|
724,678
|
247,785
|
247,785
|
|
Current assets
|
|
|
|
|
|
|
Inventories
|
|
179,741
|
206,729
|
-
|
-
|
|
Trade and other
receivables
|
|
277,754
|
271,160
|
5,667
|
5,875
|
|
Current tax assets
|
|
-
|
5,995
|
-
|
-
|
|
Financial assets at fair value
through OCI
|
|
3,625
|
-
|
-
|
-
|
|
Cash and cash
equivalents
|
|
126,715
|
87,224
|
416
|
186
|
|
|
|
587,835
|
571,108
|
6,083
|
6,061
|
|
Total assets
|
|
1,289,250
|
1,295,786
|
253,868
|
253,846
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Equity attributable to owners of
the parent
|
|
|
|
|
|
Ordinary shares
|
|
8,960
|
8,943
|
8,960
|
8,943
|
|
Share premium
|
|
144,926
|
144,926
|
144,926
|
144,926
|
|
Employee share schemes
reserve
|
|
6,793
|
5,004
|
-
|
-
|
|
Foreign currency translation
reserve
|
|
(2,992)
|
(2,379)
|
-
|
-
|
|
Cashflow hedging
reserve
|
|
7,442
|
786
|
-
|
-
|
|
Other reserves
|
|
(30,781)
|
(30,781)
|
71,019
|
71,019
|
|
Retained earnings
|
|
175,963
|
167,862
|
28,961
|
28,958
|
|
|
|
310,311
|
294,361
|
253,866
|
28,958
|
|
Non-controlling
interests
|
|
11,167
|
10,956
|
-
|
-
|
|
Total equity
|
|
321,478
|
305,317
|
253,866
|
28,958
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Borrowings
|
13
|
237,792
|
270,510
|
-
|
-
|
|
Lease liabilities
|
11
|
211,585
|
230,152
|
-
|
-
|
|
Deferred income tax
liabilities
|
|
14,743
|
15,921
|
-
|
-
|
|
|
|
464,120
|
516,583
|
-
|
-
|
|
Current liabilities
|
|
|
|
|
|
|
Borrowings
|
13
|
28,641
|
28,279
|
-
|
-
|
|
Lease liabilities
|
11
|
15,276
|
16,006
|
-
|
-
|
|
Trade and other
payables
|
|
458,787
|
426,203
|
2
|
-
|
|
Financial liabilities at fair
value through OCI
|
|
244
|
3,398
|
-
|
-
|
|
Current tax liabilities
|
|
704
|
-
|
-
|
-
|
|
|
|
503,652
|
473,886
|
2
|
-
|
|
Total liabilities
|
|
967,772
|
990,469
|
2
|
-
|
|
Total equity and liabilities
|
|
1,289,250
|
1,295,786
|
253,868
|
28,958
|
|
|
|
|
|
|
|
The notes are an integral part of
these consolidated financial statements.
|
R. Watson OBE
M.
Osborne
Director
Director
Hilton Food Group plc - Registered
number: 06165540
Consolidated and Company Statement of changes in
equity
|
|
|
Attributable to owners of the parent
|
|
|
|
|
Share
capital
|
Share
premium
|
Own
shares
|
Employee
share schemes reserve
|
Foreign
currency translation reserve
|
Cashflow
hedge reserve
|
Other
reserves
|
Retained
earnings
|
Total
|
Non-controlling interests
|
Total
equity
|
|
Group
|
Note
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Balance at 3 January
2022
|
|
8,893
|
142,043
|
(87)
|
6,990
|
(2,106)
|
-
|
(30,781)
|
176,449
|
301,401
|
6,548
|
307,949
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
17,706
|
17,706
|
1,786
|
19,492
|
|
Other comprehensive
(expense)/income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
differences
|
|
-
|
-
|
-
|
-
|
(273)
|
-
|
-
|
-
|
(273)
|
302
|
29
|
|
Gain/(Loss) on cash flow
hedging
|
|
-
|
-
|
-
|
-
|
-
|
786
|
-
|
-
|
786
|
-
|
786
|
|
Total comprehensive income for the
period
|
|
-
|
-
|
-
|
-
|
(273)
|
786
|
-
|
17,706
|
18,219
|
2,088
|
20,307
|
|
Transactions with non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(801)
|
(801)
|
3,584
|
2,783
|
|
Issue of new shares
|
|
50
|
2,883
|
-
|
-
|
-
|
-
|
-
|
-
|
2,933
|
-
|
2,933
|
|
Adjustment in respect of employee
share schemes
|
|
-
|
-
|
-
|
(655)
|
-
|
-
|
-
|
-
|
(655)
|
-
|
(655)
|
|
Settlement of employee share
scheme
|
|
-
|
-
|
87
|
(300)
|
-
|
-
|
-
|
-
|
(213)
|
-
|
(213)
|
|
Tax on employee share
schemes
|
-
|
-
|
-
|
(1,031)
|
-
|
-
|
-
|
-
|
(1,031)
|
-
|
(1,031)
|
|
Dividends paid
|
8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(25,492)
|
(25,492)
|
(1,264)
|
(26,756)
|
|
Total transactions with
owners
|
|
50
|
2,883
|
87
|
(1,986)
|
-
|
-
|
-
|
(26,293)
|
(25,259)
|
2,320
|
(22,939)
|
|
Balance at 1 January
2023
|
|
8,943
|
144,926
|
-
|
5,004
|
(2,379)
|
786
|
(30,781)
|
167,862
|
294,361
|
10,956
|
305,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
36,380
|
36,380
|
1,616
|
37,996
|
|
Other comprehensive (expense)/income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation differences
|
-
|
-
|
-
|
-
|
(613)
|
-
|
-
|
-
|
(613)
|
(132)
|
(745)
|
|
Gain on cash flow hedging
|
-
|
-
|
-
|
-
|
-
|
6,656
|
-
|
-
|
6,656
|
122
|
6,778
|
|
Total comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
(613)
|
6,656
|
-
|
36,380
|
42,423
|
1,606
|
44,029
|
|
Transactions with non-controlling interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
150
|
150
|
|
Issue of new shares
|
|
17
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
17
|
-
|
17
|
|
Adjustment in respect of employee share
schemes
|
|
-
|
-
|
-
|
1,815
|
-
|
-
|
-
|
-
|
1,815
|
-
|
1,815
|
|
Tax on employee share schemes
|
-
|
-
|
|
(26)
|
-
|
-
|
-
|
-
|
(26)
|
-
|
(26)
|
|
Dividends paid
|
8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(28,279)
|
(28,279)
|
(1,545)
|
(29,824)
|
|
Total transactions with owners
|
17
|
-
|
-
|
1,789
|
-
|
-
|
-
|
(28,279)
|
(26,473)
|
(1,395)
|
(27,868)
|
|
Balance at 31 December 2023
|
|
8,960
|
144,926
|
-
|
6,793
|
(2,992)
|
7,442
|
(30,781)
|
175,963
|
310,311
|
11,167
|
321,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 3 January
2022
|
|
8,893
|
142,043
|
-
|
-
|
-
|
-
|
71,019
|
28,850
|
250,805
|
-
|
250,805
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
25,600
|
25,600
|
-
|
25,600
|
|
Total comprehensive income for the
year
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
25,600
|
25,600
|
-
|
25,600
|
|
Issue of new shares
|
|
50
|
2,883
|
-
|
-
|
-
|
-
|
-
|
-
|
2,933
|
-
|
2,933
|
|
Dividends paid
|
8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(25,492)
|
(25,492)
|
-
|
(25,492)
|
|
Total transactions with
owners
|
|
50
|
2,883
|
-
|
-
|
-
|
-
|
-
|
(25,492)
|
(22,559)
|
-
|
(22,559)
|
|
Balance at 1 January
2023
|
|
8,943
|
144,926
|
-
|
-
|
-
|
-
|
71,019
|
28,958
|
253,846
|
-
|
253,846
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
28,282
|
28,282
|
-
|
28,282
|
|
Total comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
28,282
|
28,282
|
-
|
28,282
|
|
Issue of new shares
|
|
17
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
17
|
-
|
17
|
|
Dividends paid
|
8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(28,279)
|
(28,279)
|
-
|
(28,279)
|
|
Total transactions with owners
|
17
|
-
|
-
|
-
|
-
|
-
|
-
|
(28,279)
|
(28,262)
|
-
|
(28,262)
|
|
Balance at 31 December 2023
|
|
8,960
|
144,926
|
-
|
-
|
-
|
-
|
71,019
|
28,961
|
253,866
|
-
|
253,866
|
The notes are an integral part of
these consolidated financial statements.
Consolidated and Company Cash flow
statements
|
|
|
|
Group
|
Company
|
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
52 weeks
|
52
weeks
|
52 weeks
|
52
weeks
|
|
|
Notes
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Cash generated from
operations
|
14
|
216,125
|
98,312
|
-
|
-
|
|
Interest paid
|
|
(38,062)
|
(24,768)
|
-
|
-
|
|
Income tax paid
|
|
(11,129)
|
(13,881)
|
-
|
-
|
|
Net cash generated from operating
activities
|
|
166,934
|
59,663
|
-
|
-
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Acquisition of subsidiary, net of
cash acquired
|
|
(413)
|
(81,822)
|
-
|
-
|
|
Acquisition investments in
associates
|
|
(1,685)
|
(1,764)
|
-
|
-
|
|
Issue/(repayment) of inter-company
loan
|
|
-
|
-
|
227
|
(1,206)
|
|
Purchases of property, plant and
equipment
|
|
(55,428)
|
(55,140)
|
-
|
-
|
|
Proceeds from sale of property,
plant and equipment
|
|
975
|
261
|
-
|
-
|
|
Purchases of intangible
assets
|
|
(4,190)
|
(1,622)
|
-
|
-
|
|
Interest received
|
|
571
|
356
|
-
|
-
|
|
Dividends received
|
|
-
|
-
|
28,282
|
25,600
|
|
Dividends received from joint
venture
|
|
468
|
672
|
-
|
-
|
|
Insurance proceeds for property,
plant, and equipment
|
|
4,906
|
-
|
-
|
-
|
|
Net cash (used in)/generated from
investing activities
|
|
(54,796)
|
(139,059)
|
28,509
|
24,394
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Purchase of non-controlling
interest
|
|
-
|
(1,151)
|
-
|
-
|
|
Proceeds from
borrowings
|
15
|
11,372
|
295,790
|
-
|
-
|
|
Repayments of
borrowings
|
|
(38,313)
|
(228,565)
|
-
|
-
|
|
Payment of lease
liability
|
|
(14,585)
|
(15,631)
|
-
|
-
|
|
Issue of ordinary
shares
|
|
-
|
1,133
|
-
|
1,133
|
|
Dividends paid to owners of the
parent
|
|
(28,279)
|
(25,492)
|
(28,279)
|
(25,492)
|
|
Dividends paid to non-controlling
interests
|
|
(1,545)
|
(1,264)
|
-
|
-
|
|
Net cash (used in)/generated from
financing activities
|
|
(71,350)
|
24,820
|
(28,279)
|
(24,359)
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
|
40,788
|
(54,576)
|
230
|
35
|
|
Cash and cash equivalents at
beginning of the year
|
|
87,224
|
140,170
|
186
|
151
|
|
Exchange (losses)/gains on cash
and cash equivalents
|
15
|
(1,297)
|
1,630
|
-
|
-
|
|
Cash and cash equivalents at end of the
year
|
|
126,715
|
87,224
|
416
|
186
|
|
|
|
|
|
|
|
|
The notes are an integral part of
these consolidated financial statements.
|
Notes to the financial statements
1
General information
Hilton Food Group plc ('the
Company') and its subsidiaries (together 'the Group') is a leading
specialist international food packing business supplying major
international food retailers in fourteen European countries,
Australia and New Zealand. The Company's subsidiaries are listed in
a note to the full financial statements.
The Company is a public company
limited by shares incorporated and domiciled in the UK and
registered in England. The address of the registered office is 2-8
The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE.
The registered number of the Company is 06165540.
The Company maintains a Premium
Listing on the London Stock Exchange.
The financial period represents
the 52 weeks to 31 December 2023 (prior financial period 52 weeks
to 1 January 2023).
This preliminary announcement was
approved for issue on 2 April 2024.
2
Summary of significant accounting policies
The accounting policies are
consistent with those of the annual financial statements for the
year ended 1 January 2023.
Basis of preparation
The consolidated and company
financial statements of Hilton Food Group plc have been
prepared under the historical cost
convention except for certain financial assets and liabilities
measured at fair value and in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
The consolidated and company
financial statements have been prepared on the going concern basis.
The reasons why the Directors consider this basis to be appropriate
are set out in the Performance and financial review.
The financial statements are
presented in Sterling and all values are rounded to the nearest
thousand (£'000) except when otherwise indicated.
The financial information included
in this preliminary announcement does not constitute statutory
accounts of the Group for the years ended 31 December 2023 and 1
January 2023 but is derived from those accounts. Statutory accounts
for 2022 have been delivered to the Registrar of Companies and
those for 2023 will be delivered following the
Company's Annual General Meeting. The auditors have reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498(2) or (3) of
the Companies Act 2006.
3
Segment information
Management have determined the
operating segments based on the reports reviewed by the Executive
Directors that are used to make strategic decisions.
The Executive Directors have
considered the business from both a geographic and product
perspective.
From a geographic perspective, the
Executive Directors consider that the Group has four operating
segments: i) UK & Ireland which comprises the Group's
operations in United Kingdom and Republic of Ireland; ii) Europe
which includes the Group's operations in the Netherlands, Sweden,
Denmark, Central Europe and Portugal; iii) APAC comprising the
Group's operations in Australia and New Zealand; and iv) Central
costs. Previously, the UK & Ireland and Europe segments were
reported on a combined basis as "Europe" but following the changes
to the Group's organisational structure have now been shown
separately. The restated segments are shown in the tables
below.
From a product perspective the
Executive Directors consider that the Group has only one
identifiable product, wholesaling of food protein products
including meat, fish and vegetarian. The Executive Directors
consider that no further segmentation is appropriate, as all of the
Group's operations are subject to similar risks and returns and
exhibit similar long term financial performance.
|
The segment information provided
to the Executive Directors for the reportable segments is as
follows:
|
|
|
UK &
Ireland
|
Europe
|
APAC
|
Central
costs
|
|
UK &
Ireland
|
Europe
|
APAC
|
Central
costs
|
|
|
|
2023
|
2022
|
|
|
Total
|
Total
|
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Total revenue
|
1,389,095
|
1,061,406
|
1,614,975
|
-
|
4,065,476
|
1,349,055
|
999,300
|
1,592,946
|
-
|
3,941,301
|
|
Inter-co revenue
|
(59,827)
|
(16,102)
|
-
|
-
|
(75,929)
|
(66,969)
|
(26,732)
|
-
|
-
|
(93,701)
|
|
Third party revenue
|
1,329,268
|
1,045,304
|
1,614,975
|
-
|
3,989,547
|
1,282,086
|
972,568
|
1,592,946
|
-
|
3,847,600
|
|
Adjusted operating profit/(loss) segment result (see note
17)
|
35,492
|
40,851
|
30,277
|
(11,639)
|
94,981
|
13,629
|
36,043
|
26,705
|
(5,233)
|
71,144
|
|
Amortisation of acquired
intangibles
|
(5,084)
|
(4,432)
|
-
|
-
|
(9,516)
|
(2,449)
|
(5,808)
|
-
|
-
|
(8,257)
|
|
Exceptional items
|
(1,778)
|
(1,950)
|
-
|
(147)
|
(3,875)
|
(2,214)
|
(6,800)
|
-
|
(2,882)
|
(11,896)
|
|
Impact of IFRS 16
|
553
|
662
|
3,282
|
42
|
4,539
|
487
|
428
|
2,120
|
-
|
3,035
|
|
Operating profit/(loss) segment result
|
29,183
|
35,131
|
33,559
|
(11,744)
|
86,129
|
9,453
|
23,863
|
28,825
|
(8,115)
|
54,026
|
|
Finance income
|
35
|
137
|
399
|
-
|
571
|
6
|
350
|
-
|
-
|
356
|
|
Finance costs
|
(9,107)
|
(10,512)
|
(13,817)
|
(4,626)
|
(38,062)
|
(2,829)
|
(5,265)
|
(5,336)
|
(11,338)
|
(24,768)
|
|
Income tax
(expense)/credit
|
(2,725)
|
(4,822)
|
(6,087)
|
2,992
|
(10,642)
|
771
|
(4,240)
|
(7,505)
|
852
|
(10,122)
|
|
Profit/(loss) for the period
|
17,386
|
19,934
|
14,054
|
(13,378)
|
37,996
|
7,401
|
14,708
|
15,984
|
(18,601)
|
19,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and
impairment
|
23,341
|
19,559
|
35,974
|
555
|
79,429
|
26,787
|
12,989
|
37,640
|
353
|
77,769
|
|
Additions to non-current
assets
|
29,565
|
21,078
|
8,260
|
715
|
59,618
|
33,408
|
12,789
|
9,643
|
1,167
|
57,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
404,751
|
397,551
|
431,684
|
36,128
|
1,270,114
|
412,651
|
357,285
|
481,229
|
24,825
|
1,275,990
|
|
Current income tax
assets
|
|
|
|
|
-
|
|
|
|
|
5,995
|
|
Deferred income tax
assets
|
|
|
|
|
19,136
|
|
|
|
|
13,801
|
|
Total assets
|
|
|
|
|
1,289,250
|
|
|
|
|
1,295,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
187,225
|
199,881
|
380,598
|
184,621
|
952,325
|
184,209
|
202,694
|
466,492
|
121,153
|
974,548
|
|
Current income tax
liabilities
|
|
|
|
|
704
|
|
|
|
|
-
|
|
Deferred income tax
liabilities
|
|
|
|
|
14,743
|
|
|
|
|
15,921
|
|
Total liabilities
|
|
|
|
|
967,772
|
|
|
|
|
990,469
|
Sales between segments are carried
out at arm's length.
The Executive Directors assess the
performance of each operating segment based on its operating profit
before exceptional items and amortisation of acquired intangibles
and also before the impact of IFRS 16 (see note 17). Operating
profit is measured in a manner consistent with that in the income
statement.
The amounts provided to the
Executive Directors with respect to total assets and liabilities
are measured in a manner consistent with that of the financial
statements. The assets are allocated based on the operations of the
segment and their physical location. The liabilities are allocated
based on the operations of the segment.
The Group has five principal
customers (comprising groups of entities known to be under common
control), Tesco, Ahold Delhaize, Coop Danmark, ICA Gruppen and
Woolworths. These customers are located in the United Kingdom,
Netherlands, Belgium, Republic of Ireland, Sweden, Denmark and
Central Europe including Poland, Czech Republic, Hungary, Slovakia,
Latvia, Lithuania and Estonia and APAC.
|
Analysis of revenues from external
customers and non-current assets are as follows:
|
|
|
|
|
Revenues
from external customers
|
Non-current assets excluding deferred tax assets
|
|
|
2023
|
2022
|
2023
|
2022
|
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Analysis by geographical area
|
|
|
|
|
|
United Kingdom - country of
domicile
|
1,265,333
|
1,184,006
|
223,058
|
257,481
|
|
Netherlands
|
475,790
|
446,387
|
117,829
|
56,671
|
|
Belgium
|
18,994
|
26,915
|
94
|
883
|
|
Sweden
|
245,202
|
237,438
|
24,392
|
9,119
|
|
Republic of Ireland
|
89,054
|
83,686
|
5,184
|
3,008
|
|
Denmark
|
123,098
|
131,845
|
16,207
|
16,468
|
|
Central Europe
|
154,722
|
142,905
|
23,735
|
23,717
|
|
APAC
|
1,617,354
|
1,594,418
|
271,780
|
343,530
|
|
|
3,989,547
|
3,847,600
|
682,279
|
710,877
|
|
Analysis by principal customer
|
|
|
|
|
|
Customer 1
|
1,107,282
|
1,100,571
|
|
|
|
Customer 2
|
337,832
|
341,289
|
|
|
|
Customer 3
|
243,501
|
230,716
|
|
|
|
Customer 4
|
120,770
|
124,506
|
|
|
|
Customer 5
|
1,447,520
|
1,430,806
|
|
|
|
Other
|
732,642
|
619,712
|
|
|
|
|
3,989,547
|
3,847,600
|
|
|
|
4
Exceptional items
|
|
|
|
|
|
|
Operating
profit
|
Tax
|
Profit
after tax
|
|
|
|
2023
|
2023
|
2023
|
|
|
Group
|
£'000
|
£'000
|
£'000
|
|
|
Fire in Belgium
|
7,711
|
-
|
7,711
|
|
|
Insurance proceeds
|
(9,776)
|
-
|
(9,776)
|
|
|
Impairment
|
1,955
|
(282)
|
1,673
|
|
|
Reorganisation costs
|
3,985
|
(939)
|
3,046
|
|
|
Total exceptional costs/(income)
|
3,875
|
(1,221)
|
2,654
|
|
|
|
|
|
|
|
|
|
Operating profit
|
Tax
|
Profit
after
tax
|
|
|
|
2022
|
2022
|
2022
|
|
|
Group
|
£'000
|
£'000
|
£'000
|
|
|
Fire in Belgium
|
9,500
|
-
|
9,500
|
|
|
Acquisition of Foods Connected
Ltd
|
(2,701)
|
-
|
(2,701)
|
|
|
Acquisition related
costs
|
1,204
|
-
|
1,204
|
|
|
Reorganisation costs
|
3,893
|
(145)
|
3,748
|
|
|
Total exceptional
costs/(income)
|
11,896
|
(145)
|
11,751
|
|
|
|
|
|
|
|
|
|
| |
Fire in Belgium
In June 2021 the Group's facility
in Belgium suffered an extensive fire. Exceptional costs totalling
£7,711,000 (2022 cost £9,500,000) have been recognised in the
period relating to additional costs incurred in continuing to
operate in Belgium including the ongoing insurance and legal
claim.
Insurance Proceeds.
The Group received an interim
insurance payment of £9,776,000 related to the Fire Insurance
claims in Belgium with further insurance claims pending. The
results for the period to 31 December 2023 do not include potential
additional income that may be received in respect of these claims.
The balance of insurance proceeds are considered to be contingent
assets. Legal claims have been made against the Group in connection
with the fire. However at this stage the Group considers the
likelihood of incurring financial liabilities as a result of these
claims to be remote.
Impairment
Dalco announced the closure of one
of its sites during the year. This closure allows us to optimise
production and drive efficiencies at a single site creating a
centre of excellence for our vegan and vegetarian production. An
exceptional impairment charge of £1,200,000 has been recognised in
respect of property, plant, and equipment. An additional impairment
of £755,000 has been taken in respect of computer software in
Belgium. An exceptional tax credit of £282,000 has been recognised
in respect of these costs.
Reorganisation Costs
During the period exceptional
reorganisation costs of £3,985,000 have been recognised by the
Group. These costs resulted from on-going efficiency and
restructuring programs which led to redundancies at a number of
facilities operated by the Group. An exceptional tax credit of
£939,000 has been recognised in respect of these costs.
|
5
Finance income and finance costs
|
|
|
|
|
2023
|
2022
|
|
Group
|
£'000
|
£'000
|
|
Finance income
|
|
|
|
Interest income on short term bank
deposits
|
565
|
63
|
|
Other interest income
|
6
|
293
|
|
Finance income
|
571
|
356
|
|
Finance costs
|
|
|
|
Bank borrowings
|
(20,056)
|
(12,241)
|
|
Interest on lease
liabilities
|
(8,556)
|
(8,758)
|
|
Supply chain finance
interest
|
(8,248)
|
(2,721)
|
|
Other interest expense
|
(1,202)
|
(1,048)
|
|
Finance costs
|
(38,062)
|
(24,768)
|
|
Finance costs - net
|
(37,491)
|
(24,412)
|
|
6
Income tax expense
|
|
|
|
|
2023
|
2022
|
|
Group
|
£'000
|
£'000
|
|
Current income tax
|
|
|
|
Current tax on profits for the
period
|
17,088
|
13,697
|
|
Adjustments to tax in respect of
previous periods
|
(160)
|
195
|
|
Total current tax
|
16,928
|
13,892
|
|
Deferred income tax
|
|
|
|
Origination and reversal of
temporary differences
|
(5,769)
|
(3,753)
|
|
Adjustments to tax in respect of
previous periods
|
(517)
|
(17)
|
|
Total deferred tax
|
(6,286)
|
(3,770)
|
|
Income tax expense
|
10,642
|
10,122
|
Deferred tax charged directly to
equity during the period in respect of employee share schemes
amounted to £26,000 (2022: charge £1,031,000).
Factors affecting future tax charges
The Group operates in numerous tax
jurisdictions around the world and is subject to factors that may
affect future tax charges including transfer pricing, tax rate
changes and tax legislation changes.
The tax on the Group's profit
before income tax differs from the theoretical amount that would
arise using the standard rate of UK Corporation Tax of 23.5% (2022:
19%) applied to profits of the consolidated entities as
follows:
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
Profit before income tax
|
48,638
|
29,614
|
|
Tax calculated at the standard
rate of UK Corporation Tax 23.5% (2022: 19%)
|
11,430
|
5,627
|
|
Effects of:
|
|
|
|
Expense/(income) not deductible
for tax purposes
|
(202)
|
1,074
|
|
Joint venture received net of
tax
|
(137)
|
(238)
|
|
Adjustments to tax in respect of
previous periods
|
(677)
|
178
|
|
Profits taxed at rates other than
23.5% (2022: 19%)
|
1,310
|
5,867
|
|
Impact of change in tax
rates
|
59
|
(398)
|
|
Non-taxable gain on acquisition of
JV
|
-
|
(513)
|
|
Unrecognised losses carried
forward/(brought forward)
|
566
|
(444)
|
|
Deferred tax recognised in
reserves
|
(26)
|
(1,031)
|
|
Accelerated capital
allowances
|
(1,681)
|
-
|
|
Income tax expense
|
10,642
|
10,122
|
|
|
|
|
|
Adjustments to tax in respect of
prior periods have resulted from changes in assumptions in respect
of deductible expenses and the application of capital
allowances.
|
7
Earnings per share
Basic earnings per share are
calculated by dividing the profit attributable to owners of the
parent by the weighted average number of ordinary shares in issue
during the period.
Diluted earnings per share are
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Group has share options for which a
calculation is done to determine the number of shares that could
have been acquired at fair value (determined as the average annual
market share price of the Group's shares) based on the monetary
value of the subscription rights attached to outstanding share
options. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the
exercise of the share options.
|
|
|
|
2023
|
|
2022
|
|
Group
|
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|
Profit attributable to owners of
the parent
|
(£'000)
|
36,380
|
36,380
|
17,706
|
17,706
|
|
Weighted average number of
ordinary shares in issue
|
(thousands)
|
89,544
|
89,544
|
89,234
|
89,234
|
|
Adjustment for share
options
|
(thousands)
|
-
|
895
|
-
|
690
|
|
Adjusted weighted average number
of ordinary shares
|
(thousands)
|
89,544
|
90,439
|
89,234
|
89,924
|
|
Basic and diluted earnings per
share
|
(pence)
|
40.6
|
40.2
|
19.8
|
19.7
|
|
8
Dividends
|
|
|
|
|
2023
|
2022
|
|
Group and Company
|
£'000
|
£'000
|
|
Final dividend in respect of 2022
paid Final dividend paid in year pence per share 22.6p per ordinary
share (2022: 21.5p)
|
20,221
|
19,143
|
|
Interim dividend in respect of
2023 paid Interim Dividend paid pence per share 9p per ordinary
share (2022: 7.1p)
|
8,058
|
6,349
|
|
Total dividends paid
|
28,279
|
25,492
|
The Directors propose a final
dividend of 23.0p (2022: 22.6p) per share payable on 28 June 2024
to shareholders who are on the register at 31 May 2024. This
dividend totalling £20.6m (2022: £20.2m) has not been recognised as
a liability in these consolidated financial statements.
|
9
Property, plant and equipment
|
|
|
Land and
buildings (including leasehold improvements)
|
Plant
and machinery
|
Fixtures
and fittings
|
Motor
vehicles
|
Total
|
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
|
At 3 January 2022
|
111,676
|
460,998
|
18,616
|
308
|
591,598
|
|
Exchange adjustments
|
3,313
|
15,110
|
654
|
25
|
19,102
|
|
Acquisition (note 12)
|
6,040
|
11,443
|
1,263
|
81
|
18,827
|
|
Additions
|
6,484
|
44,946
|
3,591
|
119
|
55,140
|
|
Transfer
|
-
|
496
|
100
|
-
|
596
|
|
Disposals
|
(7)
|
(1,171)
|
(47)
|
-
|
(1,225)
|
|
At 1 January 2023
|
127,506
|
531,822
|
24,177
|
533
|
684,038
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
At 3 January 2022
|
33,779
|
250,865
|
15,418
|
48
|
300,110
|
|
Exchange adjustments
|
1,122
|
7,960
|
406
|
17
|
9,505
|
|
Charge for the period
|
7,623
|
36,529
|
2,712
|
121
|
46,985
|
|
Transfer
|
-
|
496
|
100
|
-
|
596
|
|
Disposals
|
(7)
|
(717)
|
(45)
|
-
|
(769)
|
|
At 1 January 2023
|
42,517
|
295,133
|
18,591
|
186
|
356,427
|
|
Net book amount
|
|
|
|
|
|
|
At 3 January 2022
|
77,897
|
210,133
|
3,198
|
260
|
291,488
|
|
At 1 January 2023
|
84,989
|
236,689
|
5,586
|
347
|
327,611
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
At 2 January 2023
|
127,506
|
531,822
|
24,177
|
533
|
684,038
|
|
Exchange adjustments
|
(491)
|
(12,570)
|
(309)
|
(9)
|
(13,379)
|
|
Acquisition (note 12)
|
-
|
-
|
5
|
-
|
5
|
|
Additions
|
3,016
|
51,882
|
451
|
79
|
55,428
|
|
Transfer
|
400
|
(9,561)
|
7,624
|
2
|
(1,535)
|
|
Disposals
|
(881)
|
(31,043)
|
(1,939)
|
(91)
|
(33,954)
|
|
At 31 December 2023
|
129,550
|
530,530
|
30,009
|
514
|
690,603
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
At 2 January 2023
|
42,517
|
295,133
|
18,591
|
186
|
356,427
|
|
Exchange adjustments
|
(550)
|
(5,523)
|
(209)
|
(5)
|
(6,287)
|
|
Charge for the period
|
7,018
|
37,264
|
3,264
|
82
|
47,628
|
|
Exceptional impairment (note 4)
|
-
|
1,200
|
-
|
-
|
1,200
|
|
Disposals
|
(803)
|
(29,667)
|
(1,939)
|
(91)
|
(32,500)
|
|
At 31 December 2023
|
48,182
|
298,407
|
19,707
|
172
|
366,468
|
|
Net book amount
|
|
|
|
|
|
|
At 31 December 2023
|
81,368
|
232,123
|
10,302
|
342
|
324,135
|
The cost and net book amount of
property plant and equipment in the course of its construction
included above comprise plant and machinery £32,357,000 (2022:
£26,877,000).
|
10
Intangible assets
|
|
|
|
|
|
|
Computer
software
|
Brand
and customer relationships
|
Goodwill
|
Total
|
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
At 3 January 2022
|
16,751
|
35,079
|
69,482
|
121,312
|
|
Exchange adjustments
|
19
|
-
|
-
|
19
|
|
Acquisition (note 12)
|
2,849
|
37,452
|
21,105
|
61,406
|
|
Impact of finalising fair value of
prior year acquisitions (note 12)
|
-
|
9,440
|
(8,053)
|
1,387
|
|
Additions
|
1,867
|
-
|
-
|
1,867
|
|
Transfer
|
(596)
|
-
|
-
|
(596)
|
|
At 1 January 2023
|
20,890
|
81,971
|
82,534
|
185,395
|
|
Accumulated
amortisation
|
|
|
|
|
|
At 3 January 2022
|
5,204
|
10,333
|
-
|
15,537
|
|
Charge for the period
|
2,019
|
7,955
|
-
|
9,974
|
|
Transfer
|
(596)
|
-
|
-
|
(596)
|
|
At 1 January 2023
|
6,627
|
18,288
|
-
|
24,915
|
|
Net book amount
|
|
|
|
|
|
At 3 January 2022
|
11,547
|
24,746
|
69,482
|
105,775
|
|
At 1 January 2023
|
14,263
|
63,683
|
82,534
|
160,480
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
At 2 January 2023
|
20,890
|
81,971
|
82,534
|
185,395
|
|
Exchange adjustments
|
(419)
|
-
|
-
|
(419)
|
|
Acquisition (note 12)
|
1
|
343
|
1,325
|
1,669
|
|
Additions
|
4,190
|
-
|
-
|
4,190
|
|
Transfer
|
1,535
|
-
|
-
|
1,535
|
|
Disposals
|
(22)
|
-
|
-
|
(22)
|
|
At 31 December 2023
|
26,175
|
82,314
|
83,859
|
192,348
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
At 2 January 2023
|
6,627
|
18,288
|
-
|
24,915
|
|
Exchange adjustments
|
(274)
|
-
|
-
|
(274)
|
|
Charge for the period
|
2,538
|
8,314
|
-
|
10,852
|
|
Exceptional impairment (note 4)
|
755
|
-
|
-
|
755
|
|
Disposals
|
(22)
|
-
|
-
|
(22)
|
|
At 31 December 2023
|
9,624
|
26,602
|
-
|
36,226
|
|
Net book amount
|
|
|
|
|
|
At 31 December 2023
|
16,551
|
55,712
|
83,859
|
156,122
|
Amortisation charges are included
within administrative expenses in the income statement.
Goodwill Impairment Testing
Goodwill includes Seachill UK
Limited £44,000,000 (purchased 2017), SV Cuisine Limited £2,789,000
(purchased 2021), Dalco £10,168,000 (purchased in 2021), Fairfax
Meadow Limited £3,685,000 (purchased in 2021), Dutch Seafood
Company BV (Foppen) £17,805,000 (purchased in 2022), Foods
Connected Ltd £3,300,000 (controlling interest purchased in 2022)
and Evolve 4 Group £1,325,000 (purchased 2023). Each business is
considered to be a separate cash generating units. The recoverable
amount of the cash generating units was calculated based on a
value-in-use using a discounted cash flow model. For each cash
generating unit the recoverable amounts calculated exceeded their
carrying value.
The key assumptions used in the
calculations are projected EBITDA, projected profit after tax, the
pre-tax and post-tax discount rates and the growth rates used to
extrapolate cash flows beyond the projected period. EBITDA and
profit after tax are based on one-year budgets approved by the
Board and longer term, three year, projections based on past
experience adjusted to take account of the impact of expected
changes to sales prices, volumes, business mix and margin. Cash
flows are discounted at a pre-tax discount rate of 9.3%-13.4%
(2022: 9.6%-10%) based on the country and cash generating unit with
a growth rate of 2%-8% (2022: 2%) used to extrapolate cash flows.
Discount rates and growth rates are calculated with reference to
external benchmarks and where relevant past experience.
Sensitivity to changes in assumptions
The cash generating unit most
sensitive to changes in assumptions, given the current challenges
in the alternative proteins market is Dalco. The recoverable amount
of the Dalco cash generating unit, calculated on a value in use
basis, exceeded its carrying value and therefore no impairment was
required. Key assumptions applied in the calculations of the
recoverable amount were forecast EBITDA, a pre-tax discount rate of
9.3% and a growth rate of 2%.
The calculations are sensitive to
changes in these assumptions with reasonable possible changes in
assumptions being an increase in the discount rate of 0.5%pts, a
reduction in growth rate of 0.5%pts or a reduction in budgeted
cashflows of 5%. However, applying these reasonable sensitivities
individually would not give rise to an impairment.
The impact in running reasonable
sensitivities did not result in a material impairment in any of the
other CGU's subject to impairment testing.
No indicators of impairment were
identified in respect of other, amortised, intangible assets and
therefore no impairment review has been undertaken.
Goodwill acquired in the period
Goodwill and other intangible
assets totalling £1,325,000 has been provisionally recognised
following the acquisition of Evolve 4 Group forming a separate cash
generating unit in the period (see note 12). The individual cash
generating units have been tested for impairment in the 2023
financial period.
|
11
Leases
|
|
|
|
|
|
|
|
|
|
|
|
(i) Amounts recognised in the balance sheet
|
|
|
|
|
|
The balance sheet includes the
following amounts relating to leases:
|
|
|
|
|
|
|
|
|
|
|
Lease: right of use assets
|
Land
& Buildings
|
Equipment
|
Vehicles
|
Total
|
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Opening net book amount as at 3
January 2022
|
211,773
|
7,234
|
2,997
|
222,004
|
|
Exchange Adjustments
|
5,946
|
230
|
80
|
6,256
|
|
Additions
|
2,462
|
2,272
|
1,101
|
5,835
|
|
Acquisition (note 12)
|
3,106
|
-
|
108
|
3,214
|
|
Remeasurements, reclassification
and scope changes
|
120
|
-
|
(71)
|
49
|
|
Depreciation
|
(17,105)
|
(1,945)
|
(1,730)
|
(20,780)
|
|
Closing net book amount at 1
January 2023 and 2 January 2023
|
206,302
|
7,791
|
2,485
|
216,578
|
|
|
|
|
|
|
|
Exchange Adjustments
|
(9,703)
|
(105)
|
(17)
|
(9,825)
|
|
Additions
|
-
|
4,123
|
996
|
5,119
|
|
Reclassification
|
3,990
|
(2,584)
|
(1,406)
|
-
|
|
Remeasurements, reclassification and scope
changes
|
1,012
|
175
|
18
|
1,205
|
|
Depreciation
|
(16,086)
|
(2,225)
|
(683)
|
(18,994)
|
|
Closing net book amount at 31 December 2023
|
185,515
|
7,175
|
1,393
|
194,083
|
|
|
|
|
|
|
|
Lease liabilities
|
|
|
2023
|
2022
|
|
Group
|
|
|
£'000
|
£'000
|
|
Current
|
|
|
15,276
|
16,006
|
|
Non-current
|
|
|
211,585
|
230,152
|
|
|
|
|
226,861
|
246,158
|
|
|
|
|
|
|
|
Maturity analysis - contractual undiscounted cash
flows
|
|
2023
|
2022
|
|
Group
|
|
£'000
|
£'000
|
|
Less than one year
|
|
|
22,945
|
22,645
|
|
One to five years
|
|
|
80,502
|
86,449
|
|
More than five years
|
|
|
198,430
|
220,081
|
|
Total lease liabilities
|
|
|
301,877
|
329,175
|
|
|
|
|
|
|
|
(ii) Amounts recognised in the consolidated income
statement
|
|
|
|
The income statement shows the
following amounts related to leases:
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge on right-of-use assets
|
|
|
2023
|
2022
|
|
Group
|
|
|
£'000
|
£'000
|
|
Buildings
|
|
|
16,086
|
17,105
|
|
Plant & equipment
|
|
|
2,225
|
1,945
|
|
Vehicles
|
|
|
683
|
1,730
|
|
|
|
|
18,994
|
20,780
|
|
|
|
|
|
|
|
Interest expenses (included in
finance costs)
|
|
8,556
|
8,758
|
|
|
|
|
|
|
|
Expenses relating to short-term
leases (included in costs of goods sold and administrative
expenses)
|
|
|
1,130
|
748
|
|
|
|
|
|
|
|
The total cash outflow for leases
in 2023 was £22,699,00 (2022: £24,387,000).
|
|
|
|
|
|
|
|
|
|
Variable Lease Payments
|
|
|
|
|
|
Leases with liabilities recognised
of £9,014,000 (2022: £9,476,000), accounting for 3.7% (2022: 3.8%)
of total lease liabilities, are subject to five yearly RPI linked
rent reviews. These rent reviews are subject to a minimum collar,
the impact of which is included in the calculation of lease
liabilities and a maximum cap. If the impact of these variable
lease payments had been recognised, applying index levels as at 2
January 2023, lease liabilities would have increased by 2023:
£5,588,000 (2022: £4,536,000).
|
|
|
|
|
|
|
|
In addition, leases with
liabilities recognised totalling £3,606,000 (2022: £5,021,000),
accounting for 1.5% (2022: 2.0%) of total lease liabilities, are
subject to annual CPI linked rent increases. If the impact of these
variable lease payments had been recognised, applying index levels
as at 31 December 2023, lease liabilities would have increased by
£338,000 (2022: £1,054,000).
|
